Part-time GPs, i.e. women, are the main targets of the college fee grab, which may destroy member trust built in the last few years.
As an ex senior manager of a global corporate information services business, which was often referred to in its market as the “evil empire”, I’d often find myself in a room somewhere in an exotic European city with a group of other senior executives devising any which way to screw more money out of our customers.
We weren’t a bad bunch of people (mostly) but put a group of half-smart people in a room and get them all thinking “we need more money” and you will usually come up with a few innovative but completely outrageous ideas on how to extract more from your already struggling customer base.
The way these meetings usually went was someone would go to the whiteboard and propose the outrageous idea and everyone would initially get really excited as it seemed so neat and high income generating.
Then, slowly, around the table faces would change as even the sociopaths among us (you usually wouldn’t make it to the table if you weren’t a little bit of one) realised how such an idea would look in market and in particular how much trust we would surely destroy among our customers by being so crudely ruthless.
When these ideas were floated, inevitably most of us would eventually sigh and say to the presenter “yeah … nah”, disappointed that we had to close down such a great idea for practical reasons.
When I heard about the core principles of the RACGPs new fee regime these meetings immediately came to mind.
But apparently the people at the table of that meeting in the college didn’t put their hands up and say what should have been said: “Yeah … nah.”
No one said: this is ultimately a stupid idea that will be seen quickly for what it is and destroy membership trust, possibly for the lifetime of a lot of members.
Here is what should have gone through the minds of everyone sitting at the table in that meeting that gave this monumentally stupid idea the thumbs up.
What will every member think:
- When they realise that what we are essentially doing here is doubling the fees of a large proportion of our part-time members who, coincidentally, will tend to be female, in some sort of cash grab we aren’t explaining to anyone?
- Of the contradiction in our line “We’re making RACGP membership simpler and fairer” when the main impact will be on women and mums already struggling with multiple demands on their time and resources?
- About the hubris of us asking members to indicate their annual before-tax income from “all sources”, even if it’s only to say it’s above or below the $100,000 threshold?
- Of us pinging part timers for being entrepreneurial enough to have an income outside general practice, which should be none of our business?
- About our implicit threat to end their membership should they not want to disclose anything about their hard-earned income?
None of the college leadership thought any of those scenarios through?
If they didn’t, that’s not great, but if they did think it through then that’s probably worse.
What would that say about how cynically the leadership is still viewing its members?
It’s pretty weird because until now the new college leaders of the last year or so seem wholly emotionally intelligent, empathetic and determined to have a much more engaged member community (with the notable exception of continuing the employment of an ex-SAS soldier they had been told was suspected of a war crime).
So why do this and destroy all that good work they’ve done building better culture and governance?
The only available explanation is that the college is in, or thinks it is in, a lot more financial trouble than it admitted a couple of months back when it held a press conference and said it needed to make 15% of its non-training workforce redundant and start doing a whole lot of other stuff to stave off imminent and significant organisational losses.
But that whole line never felt like it ever passed the pub test in the first place: the college has something like $55 million in property assets, accumulated reserves of $22m and a reserve fund of over $11m, so the idea that they needed to take such quick and drastic action didn’t ever feel right.
It felt more like management had decided to take advantage of what were likely short-term losses created by covid and other one-off circumstances, like the timing of training transition costs, to make systemic structural changes.
That might all be OK, by the way, as maybe the college is pivoting its business models and operations to far better things than they have spent money on in the past (they’ve wasted a lot of money on dumb things like their Oxygen business without ever admitting it).
But it’s maybe not OK that they aren’t being that up front about it while chanting to the membership and the media that “transparency” is a big thing for them now.
If you were really being “transparent” and you were making this current fee structure change, one thing you’d definitely do is come out and show members your modelling of fee income going forward based on this new “means-tested” fee model.
We asked the college whether it had modelled the changes and, if so, if it would share its modelling with us.
CEO Paul Wappett said college modelling had given the result of “an increase in revenue of around $9 million cumulatively over the next two financial years, with additional financial sustainability gained through cost reductions”. You can read his full statement at the bottom.
While we waited for this answer, we did a bit of our own, based on what numbers we were able to glean from college statements and annual reports.
You’ll see we got a different result. The key numbers and all our assumptions and sources are reproduced in the table below. A college representative said they wouldn’t be sharing the details of its modelling, so we can only speculate where our inputs differ.
Some of the key takeouts from our analysis are:
- The new fee regime will bring in about another $7m or so in additional revenue for the college year on year (that’s more than the college projects), or an overall increase in fee and CPD program revenue of 20% (maybe they could have said that up front to everyone).
- Nearly all of the burden of this increase is going to fall on part-time fellows. We estimate over $5m, which represents an increase in the fees part time fellows are paying of around 60%.
- We have to make one significant assumption to get to this figure: that 80% of part-timers earn more than $100,000 a year. Given the college itself has said that $100K is the median earnings for a three days/week GP, we think it’s a pretty safe assumption.
- The other big increase in fees is 42% for GPs in training. There are no assumptions here. Just a number multiplied by before and after as provided by the college. Just how charging GPs in training 42% more is “fair” hasn’t been made clear by the college.
Let’s return to the upfront logic of the college for these increases to check their reasoning:
“We’re making RACGP membership simpler and fairer. Under our more inclusive RACGP membership model, your membership fee will be based on your annual income.”
It’s hardly simpler.
Yes, they’ve reduced the net number of categories but not by many, and in the major money category of full and part time fellows, which makes up most of the revenue, they’ve introduced enormous scope for complexity in governance and administration – checking on nearly 27,000 doctors that they are telling the truth about their actual income.
It definitely does not seem fair either.
Why is the college requiring that part-time members fork out another $5m or so in fees per year (a 60% increase in their fee base)?
The college has abandoned the idea that if you work less as a GP you should pay less in membership fees.
The college is saying that means-testing is fairer, but it’s not only means-testing work related to what the college does.
They are means-testing entire income here.
(Mr Wappett takes issue with the terms means-testing in his statement below which is pretty strange because the terms come directly from the colleges own announcement about fees on their website : “We feel that means-testing is the fairest way to segment our membership categories” our emphasis).
So if you are a nimble and hard-working part-time GP with another job, say in a startup or a media company or consulting to government, the college is going to count that income and say that this means you pay as much as a full-time member.
That doesn’t seem to make a lot of sense, as what the college does for this GP isn’t helping them make that extra income.
We asked the college how it justified taking non-GP income into account in determining fees, but the statement in response from CEO Paul Wappett skirted that question entirely. When we asked more questions we received a further statement – you can read both in full at the end.
Over and above this, the college seems to be making a very simple call to charge part-timers and GPs in training a lot more.
Why?
Maybe there is some logic, but the college doesn’t provide any.
And even if they tried it’s hard to see how they could get any such logic over the line.
Demographically a big proportion of part-timers are women, a lot of whom are likely to be mums.
How is the college going to defend that in 2023 their new fee regime essentially targets female GPs to pay a lot more?
This new fee regime is much more about more revenue than being simpler or fairer.
But targeting their female GP members in this manner?
In all my time in those rooms in far off exotic European cities with senior management I never ever saw something proposed so obviously crazy and stupid as far as future customer engagement and retention was concerned.
And, as I’ve admitted, most of us were middle-aged white male manager sociopaths.
Statement on fee changes from RACGP CEO Paul Wappett:
All members of the RACGP who have achieved Fellowship (FRACGP) receive the same benefits, the same access to resources and the same standard of service from the College. Some members, though, will earn less than a full time GP, including GPs in training and part time GPs, and the RACGP’s discounted membership categories are intended to make membership more affordable for these GPs.
$100,000 was endorsed as the cut-off point for a concessional rate to reflect approximately the median income for a three-day-per-week GP. We believe this is a fairer way to segment our membership categories.
The RACGP has no intention of asking GPs to disclose their income or their income sources. If a member wishes to avail themselves of the concessional rate, we ask only that they declare their income to be below the threshold level and that they are eligible for that concessional rate.
The RACGP also made these changes to simplify our membership categories. One of the reasons for this is that we had too many subscription categories, making it more difficult than necessary for GPs to determine the appropriate category for them and creating an administrative burden for the College. The new categories make membership simpler for GPs while retaining appropriate discounts. Where a GP’s circumstances change during the year, they can contact our member services team to discuss their situation.
Second statement from Mr Wappett:
The RACGP works hard to provide value to its members, over and above the continuing professional development and other resources the College provides.
As members will be aware, after the end of additional funding in the covid-19 pandemic that masked the cost of the RACGP’s operations, the College’s budget is around $10 million in deficit in its core membership activities, excluding grants and GP training. The College is not and will not be in debt, however it must reduce this deficit and maintain a favourable overall financial position. The membership changes have been modelled to result in an increase in revenue of around $9 million cumulatively over the next two financial years, with additional financial sustainability gained through cost reductions.
At the same time as these changes, the RACGP is also reducing its costs, as the cost of the work the College does has also increased. Salaries, rent, licence costs, suppliers and other costs are increasing at a higher rate than the increase in its membership fees.
Some members’ interactions with the RACGP will be defined by and limited to CPD, examinations, events they attend and the resources it provides like the Red Book and the Australian Journal of General Practice. While the College does seek to inform members of its other efforts and agenda, some work its staff and representatives do is less visible.
Our representatives directly advocate for the profession and members to governments, regulators and other organisations, and the public. Our committees set standards; our staff develop resources, deliver Fellowship exams, run events and represent members’ interests in a variety of forums. As one example, RACGP spokespeople have represented our members’ need for appropriate increases to Medicare rebates and reforms to our health system in over 1600 news stories since the start of 2023. We will continue to fight for the future of general practice.
The RACGP is not asking members to declare their income or the sources of that income, and all Fellows receive the same services regardless of their membership category. Membership fees are not means-tested, however we are asking members who wish to receive a discount to their membership to declare their income is below a threshold. These discounts aim to make it affordable for part-time GPs to have access to all the resources and benefits of membership while maintaining the financial sustainability of the College, which has been hampered by a significant proportion of members paying less than the full membership fee.
